Given that redistributive policies are based on the society’s preferences, where do preferences for redistribution come from? How do preferences for redistribution depend on the interpretation of the causes of income? How do external shocks and the inherited culture shape the formation of preferences for redistribution, as well as fairness views and related attitudes? We study a model in which agents’ pre-tax income depends on both effort and luck. Individuals know the income distribution and form beliefs about others’ effort. We plan to accompany the theoretical results by an empirical study.

Mitarbeit: Tom Truyts, Johannes Spinnewijn
Projektdauer: seit 2016

Completed projects

The study “Das verfügbare Einkommen in Liechtenstein im Vergleich mit der Schweiz” on behalf of Liechtenstein’s government (Ministry of Social Affairs) was published in January 2016. The main focus was to determine the disposable income (income from labor/wealth/transfers minus taxes/social contributions) and further unavoidable costs for housing, nutrition and mobility for 192 household types (variation by size, income, wealth) in each of Liechtenstein’s municipalities. Additionally, a comparison with Swiss municipalities was conducted.

Economic inequality and distribution matters have gained a lot of attention in recent international economic research and also in political debates in Liechtenstein. Is inequality increasing, how are income and wealth distributed in Liechtenstein? First results were published in LI Focus (3/2016).